Employment Law Bits

Unemployment benefits in Massachusetts explained

The Massachusetts Division of Unemployment Assistance (DUA) works to help get Massachusetts citizens back on their feet when they lose a job. DUA provides unemployment insurance (UI) benefits and transitional services while workers are awaiting re-employment. Listed below is a brief description of the services offered to the temporarily unemployed.

Weekly Benefits
Unemployment Insurance claimants are able to receive a weekly benefit of approximately 50 percent of their average weekly wage, up to the statutory maximum. The current maximum benefit rate is $628 per week. However, those with children may be eligible to receive an additional $25 per child per week up to a total of one half of the weekly benefit amount.

The maximum number of weeks a claimant can collect full benefits is 30 weeks. The maximum benefit credit amount is $18,840. Like many regular paycheck schedules, workers who are eligible for UI benefits receive a weekly payment for the prior week’s benefit.

Additionally, through the Emergency Unemployment Compensation (EUC) Program, Massachusetts claimants may be eligible for extended federal benefits.

Health Insurance Coverage
Massachusetts residents who receive UI benefits and meet certain income eligibility guidelines may also qualify for health insurance coverage under the Medical Security Program (MSP). Participants in the Program can receive assistance with making payments to a COBRA or personal health insurance plan and may even qualify for enrollment in a free health insurance plan.

Job Training
While receiving UI benefits, workers can apply for approved training if they feel training will help to secure new employment. Though DUA will not cover the costs of training, workers may be eligible for up to an additional 18 weeks of UI benefits while attending approved full-time training.
 
Job Search Assistance - One-Stop Career Center Services
For those who are either unemployed or just looking for a better job, the Commonwealth offers helpful guidance. With locations across the state, One-Stop Career Centers provide employment services that allow workers to search for jobs in an environment that is comfortable and resourceful.

As the economy works to fight its way out of this slump, it is good to know exactly how our government is aiding us through our most trying times.

Accrued unpaid vacation time must be paid unon employee termination

On June 11, 2009, the Massachusetts Supreme Judicial Court upheld the Massachusetts Wage Act. Specifically, employers are required to compensate any employee involuntarily discharged for unused accrued vacation time.

The Court rejected the argument that because the definition of wages in the Massachusetts Wage Act is restricted to vacation time that is expressly provided in an oral or written agreement, employers should have the right to limit such payments upon termination. Instead, the Court determined that the Massachusetts Wage Act requires the payment of accrued vacation time regardless of the employer’s vacation policy.

Although the Massachusetts Wage Act does not require an employer to offer employees vacation time, the Court held that if an employer does offer such time, an involuntarily discharged employee must be compensated for any unused vacation time.

Violations of the Massachusetts Wage Act can lead to substantial costs for employers because the Act requires mandatory treble damages and the award of attorneys’ fees. Employers with employees in Massachusetts should review their vacation policies and practices. Employees in Massachusetts that believe their current or previous employer has violated the Massachusetts Wage Act should contact an employment attorney.

Michelle’s Law – how college students can retain healthcare coverage during medically necessary leave from school

Michelle’s Law changes how health care plans treat full-time college students that go on medical leave. The law requires that a group health plan offering dependent coverage that is contingent upon status as a full-time student to not terminate the dependent’s coverage when that dependent loses full-time status due to a “medically necessary leave of absence.”

Michelle’s Law is intended to protect parents from the financial burdens of COBRA as a result of their college-age student losing full-time enrollment status due to an illness. It provides that health plans must continue to cover the qualifying students under the same terms as other dependent children.

Under this law, a group health plan must allow students enrolled in qualifying educational institutions who lose their full-time status to continue to be covered until either one-year after the first day of the medically necessary leave or the day that the student’s coverage would have otherwise ended, whichever is earlier.

A “medically necessary leave of absence” includes any change in a student’s enrollment at an educational institution that:

1. starts while the student is suffering from a serious illness or injury;
2. has been deemed medically necessary; and 
3. causes the student’s status to change from full-time under the terms of the health care coverage.

Qualifying educational institutions for purposes of Michelle’s Law are public or private institutions that offer two-year and four-year degree programs. However, many comparable institutions outside of the United States also qualify.

The requirements of Michelle’s Law are effective for health plans that begin on or after October 3, 2009. Plans that begin on a calendar year must be amended effective January 1, 2010. Employers should be aware of these changes and revise their plan descriptions.

COBRA health insurance coverage explained

COBRA (the Consolidated Omnibus Budget Reconciliation Act) provides people who lose their jobs the right to continued health insurance coverage at group rates. While this amount is typically higher than what employees were paying while employed, the cost is usually lower than private, individual health insurance. To be eligible for COBRA benefits, three elements must be met:

• Plan Coverage – the employee’s former employer must have provided a group health plan and employed twenty or more employees.
• Qualified Beneficiaries – this is generally an individual covered by a group health plan, and can also include the employee, the employee’s spouse or dependent children; and occasionally a retired employee may qualify.
• Qualifying Events – these are events that would result in the loss of health coverage for an individual. The two main qualifying events are (1) voluntary or involuntary termination of employment for reasons other than gross misconduct; and (2) reduction in the number of hours of employment.

Prior to 2009, COBRA participants were required to pay the entire insurance premium at the employer’s group rate, which can be costly (employers usually pay part of the premium for active employees). With President Obama’s passage of the Stimulus Package in February of 2009, certain qualified individuals may be eligible for up to a 65% reduction of their premium cost under COBRA. To be eligible for the benefit, the former employee must:

• Be eligible for COBRA continuation coverage at any time between September 1, 2008 and December 31, 2009;
• Elect COBRA coverage; and
• Be eligible for COBRA as a result of involuntary termination.

For more information regarding your rights under COBRA, please contact an employment attorney.

Mandatory paid sick leave: a fight on two fronts

Currently, less than half of private sector employees enjoy the benefit of paid sick leave. Look for that to soon change. Reformers at both the state and federal level have recently taken steps to make this employment perk mandatory for many workers. In Congress, Representative Rosa DeLauro (D-CT) and Senator Edward Kennedy (D-MA) have introduced in their respective Houses a bill that would require employers with more than 15 employees to provide workers one hour of sick leave for every 30 hours worked, up to 7 days a year. Proponents of the bill point to the fact that for many people, working when sick is a better option than staying home and missing a day’s pay. This often leads to the spread of that sickness in the workplace, causing a greater drop in productivity than if the original sick worker had just stayed home for a day or two. The bill’s opponents argue that those companies that are not offering paid sick leave, especially the smaller ones, simply cannot afford to create incentives for employees not to work by giving days of free pay. The suggestion is that, for these companies, an employee working at 70% is better than an employee not working at all. Closer to home, the Massachusetts Paid Leave Coalition is lobbying legislators in Boston to pass a similar law in the Bay State. The coalition, made up of various workers’ unions, has emphasized that fact that, because of the swine flu scare, employees are being asked to stay home if they feel unwell. The coalition’s position is that workers should not feel torn between sacrificing 1/5 of their paycheck and putting their co-workers at risk. For those who would be affected by mandatory sick leave legislation, keep an eye out, because a change may be coming soon.

Heads up to employers - changes to FMLA

The Family and Medical Leave Act (FMLA) has been amended for the first time in its 15-year history. The new rules, which were finalized on November 17, 2008, will take effect on January 16, 2009. A sample of the regulatory changes that employers and employees should be aware of include:

• Military Family Leave: The FMLA now includes two new leave entitlements for employees who are family members of covered service members.
  
  
  • First, “Military Caregiver Leave” provides up to 26 workweeks of leave in a single 12-month period to eligible employees who are family members of covered service members who suffer from a serious illness or injury incurred in the line of duty on active duty.
  • Second, “Qualifying Exigency Leave” permits eligible employees with a covered military member serving in the National Guard or Reserves to utilize the normal 12 work weeks for “any qualifying exigency” arising out of the fact that a covered military member is on active duty or called to active duty in support of a contingency operation. Qualifying exigencies include short-notice deployment, military events and related activities, childcare and school activities, financial and legal arrangements, counseling, rest and recuperation, post-deployment activities, and additional activities agreed to between the employer and employee that are not otherwise included in the previous categories.
• Penalties: In accordance with several court decisions, including the Supreme Court’s decision in Ragsdale v. Wolverine World Wide, Inc., “categorical” penalties for failing to appropriately designate FMLA leave are no longer available. When employees suffer individualized harm because the employer failed to follow the FMLA notification rules, the employer may be liable.
• Light Duty: Time spent on “light duty” following an employee’s return from FMLA leave cannot be counted against an employee’s remaining FMLA leave. If the employee is voluntarily performing a light duty assignment, the employee will not be considered to be on FMLA leave.
• Employee Notice Obligations: Employees needing unexpected FMLA leave must now follow their employer’s usual and customary call-in procedures for reporting absences (unless unusual circumstances exist) and can no longer provide notice of the need for FMLA leave up to 2 days after an absence.
• Employer Notice Obligations: Within 5 business days of the employee requesting FMLA leave, the employer must give the employee the new “Eligibility and Rights and Responsibilities” notice, which informs the employee of the need for medical certification, the policies and conditions regarding substitution of paid leave, and if the employee is not eligible for FMLA leave, at least one reason why. Employers are provided with an additional 3 business days from the previous notice time frame because of new requirements.
• Fitness-For-Duty Certifications: Changes to the current fitness-for-duty certifications now permit employers to require that the certification specifically address the employee’s ability to perform the essential functions of the employee’s job. Additionally, where a reasonable job safety concern exists, the employer may require a fitness-for-duty certification before an employee may return to work when the employee takes intermittent leave.

These changes, in addition to others, must be taken into account by employers and employees in order to remain in compliance with the FMLA.

Youth employees are entitled to the same civil rights protections as adult workers

With the holiday season approaching, some retailers, resorts, and restaurants will temporarily increase their work forces. Many of these seasonal employees will be under the age of eighteen. As such, both employers and teenage employees need to be aware of the rights and legal protections afforded to youth employees.

 

Like adult employees, youth workers are entitled to a work environment free of discrimination and harassment. The Equal Employment Opportunity Commission (EEOC) enforces federal civil rights and discrimination laws against state employers and most private employers with more than fifteen employees. These laws protect employees from discrimination on the basis of race, color, religion, sex, national origin and discrimination. The EEOC, through its Youth@Work initiative, strives to educate teens about their workplace rights. This program provides a website specifically for young employees, http://www.youth.eeoc.gov.

 

A teenage employee, who feels he has been discriminated against or harassed in violation of these laws, may file a complaint with EEOC. The EEOC will investigate, and if necessary, file a law suit. For example, the EEOC recently filed suit against WorldMark by Wyndham (a subsidiary of Wyndham Worldwide, a hospitality business operating hotels and time share resorts in over 100 countries) charging that a forty-something male manager at one of its resorts repeatedly sexually harassed young male employees between the ages of 17 and 25. As a result of this suit, Wyndham agreed to pay $370,000 to four teenage employees who had been sexually harassed by the manager.

 

Employers should be aware of that youth workers have the same rights to be free of harassment and discrimination at work as adult workers do. Employers should also be sure to educate their adult employees regarding the teenage employees’ rights before hiring additional youth employees during this busy season. More information is available at http:www.eeoc.gov/initiatives/youth/index.html.

Employer may not recover increased worker’s compensation insurance costs from negligent third-party

As a matter of first impression, on June 4, 2008, the Massachusetts Appeals Court held that an employer may not recover its increased workers’ compensation insurance costs from a negligent third-party. In that case, the employee was injured when a dumpster owned by the third-party rolled off a truck.

The employee, who was working at the time of the accident, filed a workers’ compensation claim, which was covered by the employer’s insurer. The employer filed suit, asserting that the third-party’s negligence caused the employer’s insurance costs to increase. The Appeals Court reasoned that such a claim could not be brought because the employer sought recovery for purely economic damages. In the absence of personal injury or property damage, a negligence claim cannot be brought in Massachusetts to recover purely economic losses. Thus, the employer was without a remedy.

Worker’s compensation insurance is a form of mandated, state-regulated, no-fault liability insurance, which covers employees’ work-related injury or illness. Employees injured in the workplace are eligible for worker’s compensation benefits regardless of fault. In other words, employees do not have to prove employer negligence to claim benefit. In seeking insurance coverage, an employer is advised to consider the potential economic consequences of its employees’ injuries or illnesses.

Maternity benefits may not be just for women

In a recent decision by the Massachusetts Commission Against Discrimination, commonly referred to as MCAD, the idea that benefits available under the Massachusetts Maternity Leave Act (“MMLA”) are just for women may soon be a thing of the past. Consider these two scenarios:

1. John and Jane work at Company A, which employs 40 workers. Jane has a baby and takes maternity leave in accordance with the MMLA. John’s wife also has a baby, and due to complications, John now needs to care for his child at home for six weeks. His request for leave under the MMLA is denied. Is Company A’s denial discriminatory despite the fact that the statute is called “maternity” leave?
2. John is married to Joe and works for Company A. Jane is married to Susan and also works for Company A. Each couple adopts a baby. Jane and Susan both apply for leave under the MMLA. Their requests are granted. John and Joe also apply for leave under the MMLA and both those requests are denied. Has Company A committed discrimination against John and Joe?

In both cases, the answer is “quite possibly,” according to recent statements from the MCAD office and its officials. MCAD is taking the position that they have the authority to interpret the MMLA with broad discretion. The information they are disseminating suggests that decisions to investigate discrimination allegations will be determined on a case-by-case basis, given the facts, but that the need for interpretation of the law in gender-neutral terms calls for and allows a deviation from the former strict reading that it applies only to women, particularly in light of same-sex marriages.

So whether you call it maternity leave or paternity leave, men need to know that they have a friend and voice in MCAD, and employers would be wise to revise their employee handbooks.

By: Melissa R. Gillis, Esq.

What are Shadow Equity and Phantom Stock plans?

Employers hoping to motivate and retain employees may want to consider a phantom stock or shadow equity plan. These plans allow an employer the ability to offer an incentive to current employees while preserving capital that is often used for employee compensation. These plans operate as bonus or deferred compensation plans and enable an employer to give its employees a participating interest in the company without giving them an actual ownership in the company.

Phantom stock plans and shadow equity plans can be done in a couple of ways. Compensation can be tied to the actual increase in the net worth of the company, traditionally referred to as shadow equity. If the net value or net assets of the company increase then employees will receive benefits based upon that increase.

Compensation can also shadow the value of the company’s stock shares, traditionally referred to as phantom stock. Employees are given a hypothetical share equivalent to that of a shareholder, and if the value of the stock increases over time, they will receive that benefit in the form of compensation.

These plans can also be tailored to the unique needs of a company. Employers can discriminate amongst employees, giving the benefits to only key employees, and the payout on the plan can be tied to specific events such as an employee’s death, or retirement or sale of the company.

Typically shadow equity or phantom stock is incorporated into an employment contract between an employer and employee. In drafting a shadow equity or phantom stock plan employers should carefully consider how they will structure the payout of benefits. If payouts are tied to certain events, such as death or retirement, employers may be faced with a large unexpected payment. Employers should be sure to have a financial plan in place to provide compensation when it comes due.